EMPLOYEE INVOLVEMENT AS AN EFFECTIVE MANAGEMENT TOOL IN DECISION-MAKING: A CASE STUDY OF MERCHANT BANK (GHANA) LIMITED

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1 EMPLOYEE INVOLVEMENT AS AN EFFECTIVE MANAGEMENT TOOL IN DECISION-MAKING: A CASE STUDY OF MERCHANT BANK (GHANA) LIMITED by Theodosia Lamley Quagraine (Mrs.) BSc. (Admin.) A Thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of COMMONWEALTH EXECUTIVE MASTER OF BUSINESS ADMINISTRATION MARCH 2010

2 Declaration I hereby declare that this submission, Employee Involvement as an Effective Management Tool in Decision- Making in Organizations is my own work towards the Commonwealth Executive Masters of Business Administration (CEMBA) and that to the best of my knowledge, it contains no material previously published by another person, nor material which has been accepted for the award of any other degree of the University, except where due acknowledgement has been made in the text.. Theodosia Lamley Quagraine (Mrs.) Index No. PG Date Certified by: Felicity Asiedu-Appiah (Mrs.) Supervisor Date Certified by:.. HEAD OF DEPARTMENT Date ii

3 Dedication I dedicate this work to Siisi Quagraine, my husband for his boundless encouragement, support and love and my children Fiifi, Maame, Yoofi and Yoosi Nhyira for their love. iii

4 Abstract Like all developing economies, Ghanaian industries are facing competitive pressures and rapidly changing market conditions. Decision-making and its implementation is therefore very crucial to the fortunes of any organization as it is through the successful implementation of policy decisions that the goals and objectives of an organization can be achieved to improve organizational performance. Employees are the fuel that runs the engine of the organization and it is believed that their non-involvement in the decisionmaking process creates tensions between management and staff. It leads to lost man hours among others which adversely affect the fortunes of the organization. This study, therefore, sought to determine the impact of employee involvement as a management tool in decision-making and its implementation in organizations by determining the causes of low employee involvement in decision-making and the consequences of such action on implementation of decisions. The type of research design for this study is exploratory and it relied on secondary information such as reviewing available literature and primary data. The research findings suggested that employee involvement in decision-making contributes to effective decision implementation and also creates an enabling environment for creativity and growth as employees see themselves as stakeholders and owners of the decision making implementation smooth. It was also revealed from the research that when employees see themselves as not being part of the decision-making process, they become discontented and apathetic which is likely to adversely affect organizational performance. It is recommended that employees views are sought on matters that affect their lives and work and they should also be empowered to take decisions through which they will have a sense of self-worth and a feeling of belonging that will make them give of their best in the organization. iv

5 Table of Contents Declaration ii Dedication. iii Abstract. iv Table of Contents.. v List of Tables. vii Acknowledgement viii Chapter One 1.0 Introduction Background of the Study Statement of the Problem Research Objectives Research Questions Overview of Methodology Relevance of Study Scope of Study Limitation of Work Plan of Work Chapter Two 2.0 Literature Review Introduction What is Employee Involvement Decision-Making Some Decision-making Theories Empowerment Methods of Employee Involvement Conditions for Employee Involvement in decision-making Forms of Employee Involvement Dimensions of Employee Involvement Benefits of Employee Involvement Adverse Effects of Employee Involvement Four Key Strategies of Employee Involvement 31 Chapter Three 3.0 Research Methodology and Organisational Profile Introduction Research Design Sources of Data Study Population and Sample Size Sampling Technique Sample Size Determination Data Collection Tools Data Analysis Area and Scope of Study...38 v

6 3.10 Profile of Study Organization- Merchant Bank Ghana Limited 38 Chapter Four 4.0 Data Presentation, Discussion and Analysis Introduction Socio Demographic Characteristics of Respondents Employee Involvement or Participation in Decision Making Consequences of Low Employee Involvement Ways to involve employees in decision-making How employees can be involved and its result Interview with Head of Human Resource.61 Chapter Five 5.0 Summary of Findings, Conclusions and Recommendation Introduction Summary of Findings Conclusion Recommendations.. 72 References Appendices.80. vi

7 List of Tables 2.1 The New Logic of Management Gender of respondents Age Distribution of Respondents Educational Level of Respondents Years of Service Position of Respondents Involvement of Employees in Decision-Making Employee Acceptance of Decisions Participation will lead to ownership and belongingness Consequences of low employee involvement How employees can be involved Organizational benefits.. 45 vii

8 Acknowledgement I am immensely grateful to the Omnipotent Father for sustaining me in my quest for higher education. The preparation and submission of this project work would not have been possible without the support of certain personalities who deserve my gratitude. I wish to offer my profound appreciation to Mrs. Felicity Asiedu-Appiah, my supervisor, who is a lecturer at the Kwame Nkrumah University of Science and Technology for her valuable suggestions and constructive criticisms of the content, structure and preparation of this report. I owe a debt of gratitude to my colleagues Mercy Muriel Mensah, Benedicta Baaba Micah, Cynthia Garshong-Owusu, Betty Oyewo and Cecilia Addae for urging me on to withstand the pressures and complete my project. I am especially grateful to Rev. Jonas Koranteng-Smart of Merchant Bank Ghana Ltd and all staff for the assistance offered me in the course of data gathering. To Mr. Henry Mensah of Institute of Distance Learning, KNUST, I am sincerely grateful for readiness to offer help and promptly attending to our enquiries. viii

9 1.1 Background to the Study CHAPTER ONE 1.0 INTRODUCTION Over the years, worker unrest and agitations has rocked many organizations the world over and non-involvement of employees in the decision-making process has accounted for many of these. Decision-making in organizations has been the preserve of top management without the involvement of those on the lower rungs of the ladder of management, yet they are the very ones expected to see to the implementation of these decisions. The non-involvement of lower level management in decision-making also means that vital input from employees is often not factored into decisions made. This gives rise to the problems that are experienced in organizations when it comes to the acceptance of these decisions and its implementation because employees feel slighted and of no importance because their views were not sought. They also do not feel as being part of the decision process but rather decisions are taken and pushed down their throats. This leads to resistance to compliance or a lackadaisical attitude to implementation. 1

10 Employee involvement or participation in decision-making is a concept that has not been widely understood and accepted by many as forming a very important part of human relations in organizations. The impression given by those who propose it is that it will eliminate conflicts and disagreements between the employees and management body when it comes to implementation and compliance since decisions are taken both in the interest of the employee and the organization as a whole. (McGregor, 1960) Employee participation if practiced would ensure a favorable atmosphere for implementation would be created as staff would have a feeling of trust and a sense of belongingness and therefore take ownership of decisions and see to its successful implementation. Those against the concept of employee involvement in decision-making view it as a waste of time, lowering of efficiency and weakening the effectiveness of management. (Apostolou, 2000) To another group of managers, it could be a manipulative technique to get employees to do what has been decided by deluding them into thinking they have a say in the decision process when in actual fact they are only being told to do what has already been decided. (Albrook, 1967) 2

11 In view of the increasing realization of the adverse effects of non commitment and aloofness of employees to decisions taken both in the interest of employees, the organization and its effects on productivity and performance, management of organizations are now beginning to involve employees in decision-making. It is the employees that make things happen. They put their shoulder to the wheel to get the organization s machinery moving. Without their contributions everything comes to a standstill and the goals of the organization cannot be efficiently and effectively achieved. They should, therefore be given the recognition as the most important resource (asset) in the organization. (Cotton, 1993) When this is done employee involvement it is believed would lead to an increase in productivity and also the achievement of the objectives of the organization. In these days of keen competition, to achieve growth and stability, eliciting employee s commitment towards achievement of organizations goals is very crucial. The greatest challenge facing management of organizations is how to effectively motivate and involve employees towards achieving organizational goals. The Industrial Relations Act of 1965 (Act 299) and amended by NLCDD 189 of 1967 enclosed in the statute books of the country, was a form of worker participation generally known as Collective Bargaining. This was to establish a legal relationship between the employer and the employee in the area of negotiation of Service 3

12 Conditions, Working Conditions, the setting of targets and the taking of critical decisions which affect the working environment of both. Theorists and researchers such as McGregor (1957) and Hertzberg (1966) have strengthened this evidence that a wide variety of benefits may accrue to an organization that systematically develops and consciously encourages the participative style of management that is involving employees in decision-making. Through this, productivity and efficiency would be greatly improved and some amount of strain and stress associated with working in some organizations would be removed. 1.2 STATEMENT OF THE PROBLEM In recent times, a number of organizations both local and international have witnessed a number of industrial conflicts and worker agitations which has led to confrontations between management and staff with some very dire consequences. For example, the strike actions of staff of Bank of Ghana, (The Statesman, 25/04/2007), Ghana Railways Company, Barclays Bank (Ghana News Agency, 03/10/06) among others. All these have arisen as a result of employees feeling dissatisfied about some decisions that have been taken by management and Board of the various organizations without any active involvement of the staff body and such decisions have been viewed 4

13 by employees as detrimental to their welfare and the growth, sustainability and survival of the organizations. Non-involvement of employees in the decision-making process could lead job dissatisfaction which eventually would lead to lost man hours, low productivity among others that would adversely affect the fortunes of organizations and eventually the gross domestic product of the nation at large. With the labeling of this era as the Golden Age of Business by then President of Ghana, John Agyekum Kufuor in his state of the nation address in parliament in February 2001, (Daily Graphic, Friday 16 th February, 2001), the development of this nation has reached a very critical stage where it is the expectation of all and sundry, no matter where you find yourself to put the best of one s capabilities and abilities to the realization of this goal. The improvement of the standard of living of the people demands contributions from all sectors of the economy if any significant and meaningful progress is to be made. The onus falls on every citizen of the nation and it becomes prudent that every thing possible is done to push this agenda to the fore for the good of all. However, as organizations are grappling with the problem of involvement of employees in effective decision-making, against this background, the topic under consideration would seek to research and identify the main causes and effects of low or non- 5

14 participation of employees in effective decision-making and recommend appropriate measures to address them. 1.3 RESEARCH OBJECTIVES General Objective The broad objective of this research was to study employee involvement as an effective management tool in decision-making in organizations using Merchant Bank as a case study Specific Objectives Specifically, the research sought to: i. Determine the causes of low employee involvement or participation in decisionmaking. ii. Determine the consequences of low employee involvement in decision-making on the implementation of management decisions iii. iv. Identify ways of involving employees in decision-making Assess the benefits of employee involvement in decision-making v. Make recommendations on how to improve the involvement of employees in decision-making RESEARCH QUESTIONS i. How would employee involvement in decision-making contribute effectively to implementation of decisions in Merchant Bank? 6

15 ii. In what ways could employees be involved in the decision-making process and implementation of decisions in Merchant Bank? iii. To what extent can employees be involved in decision-making in Merchant Bank? iv. What are the effects of low employee involvement in management decisionmaking and implementation in Merchant Bank? 1.5 OVERVIEW OF METHODOLOGY Information and data required for this research was mainly from secondary and primary sources. Secondary sources were used for reviewing of literature on the subject. Primary sources in the form of questionnaires and interviews were used to gather data. The questionnaire had both closed and open-ended questions. Personal interviews were had with key informants like the Human Resource Manager and the Union Chairman. Emphasis was placed on individuals occupying certain key positions who could provide the requisite information. Simple Random Sampling Technique was used in selecting respondents to the questionnaires. This technique was chosen because it afforded each employee equal opportunity of being selected and it was also be more convenient as compared to the other methods. 7

16 Data collected from respondents were summarized and tabulated. To give a clearer view of the data gathered, statistical tools like graphs were employed. 1.6 RELEVANCE OF STUDY Employee involvement in achieving desired organizational goals is a crucial task that must be vigorously pursued as it seems that there has not been a complete acceptance of the importance of the role employees play in decision-making and its effect on implementation. Managers and staff half-heartedly practice worker participation with a prejudiced mind. It is, however, incumbent upon managers to educate and involve their workers in the decision-making process in the organization. Effective human relations cannot be created nor developed through the provision of welfare facilities such as salaries, car loans, mortgage loans, bonuses among others when employees are not involved in the decision-making process. It is developed by frequent interaction with employees, showing genuine respect and sympathy for them and demonstration of goodwill and cooperation. 8

17 Employees may not be happy even if they are given the best of Conditions of Service and yet perceive management as treating them with contempt as nonentities whose input are not needed in decision-making but can be handed down anything. It is the researcher s hope and expectation that this study will in the end help identify the causes of non-involvement of employees in decision-taking, recommend ways to get employees involved in the decision-making process and supplement as well as complement similar researches undertaken and serve as a useful reference for academic purposes. It is also aimed that the study will help managers understand and accept the concept of worker participation in decision-making and that there is much more to be gained in achieving good human relations between employees and also in the achievement of organizational goals and objectives. 1.7 SCOPE OF STUDY This research covered the involvement of employees in decision-making using Merchant Bank (Ghana) Limited as the case study. The Bank has 23 branches scattered in the country but its Accra Main, Adabraka and Achimota branches were the branches used. 9

18 1.8 LIMITATION OF WORK Limitations faced in the course of the research were accessibility to information, difficulty in accessing the target sample during working hours due to the busy nature of their operations, inability to use a large sample size due to time and resource constraints, unwillingness of employees to pour out their grievances for fear of victimization if found out. 1.9 PLAN OF WORK The study has been organized into five chapters. Chapter one gives a general background and introduction to the topic of study. Chapter Two deals with the review of literature pertaining to the research study. Different forms of worker participation and benefits would also be looked into. Chapter Three gives an explanation of the research process and the methods adopted for collecting, coding and analyzing data will be made. Chapter Four is a discussion of the results of the questionnaires distributed and the interviews had. Chapter Five focuses on the summary of Findings, conclusions drawn and recommendation made on the topic under research. 10

19 CHAPTER TWO 2.0 LITERATURE REVIEW 2.1 Introduction Something about management looks so easy that we all think we could succeed where others fail. But management is really not easy. They must be good at strategy, persuasion, and negotiation. Vision, fortitude, passion, intelligence, ethical standards, courage and tenacity are also de rigueur. (Teal, 1996) A variety of management practices centered on empowerment and trust are designed to increase employee commitment to organizational objectives and performance improvement. The term employee involvement is often used interchangeably with employee participation, but employee involvement practices tend to take place at individual or workgroup level, rather than at higher decision making levels. Changing conditions of the market space and place and the keen competitiveness of the environment over the last few years has convinced shareholders and management of organizations to adopt a new paradigm based on new values. The speed with which new products are springing up in the banking sector has set many a Management Board to have hard and tough times in coming up with ways in order to compete in the global marketplace. 11

20 If the market place is changing then the organizational culture also have to change and this involves understanding the current culture, its role and dealing with the culture changes in depth. There is the need for speed and greater flexibility and these it is believed can be gained through employee involvement. When flexibility is high, employees feel free to innovate and do their personal best without being tied to red tape and bureaucracy. Red tape whether real or perceived irritates employees and slows or shuts them completely down. Employee involvement is an old idea constantly being revitalized by organizations and new generations of practitioners throughout the world. For instance, the oldest documented system of formal employee involvement is a document called employee suggestion system, established by Eastman Kodak in However, employee involvement was revolutionalized when McGregor (1957) and Hertzberg (1966) first started writing about the topic in their articles The Human Side of Enterprise and Work and the Nature of Man. When an organization truly wants to create a positive work environment that is based on high trust, exceptional customer service, collaborative teamwork, operational excellence, and creative problem solving, then the leadership team must being to 12

21 understand, invest in, and be responsive to the needs of the group that represents the organization s most valuable assets, and is also one of its most important customers, the employees. The return on such nominal investments will come in the form of higher levels of employee motivation, creativity, productivity, and commitment that will move the organization forward with greater profitability. A fundamental Total Quality Management precept is that employees must be involved and empowered. 2.2 What is Employee Involvement? Employee involvement is a process for empowering employees to participate in managerial decision-making and improvement activities appropriate to their levels in the organization. According to the Chartered Institute of Personnel and Development (CIPD, 2001): Employee involvement is a range of processes designed to engage the support, understanding and optimum contribution of all employees in an organization and their commitment to its objectives. Employee participation is also defined as a process of employee involvement designed to provide employees with the opportunity to influence and where appropriate, take part in decision making on matters which affect them. 13

22 Employee involvement is creating an environment in which people have an impact on decisions and actions that affect their jobs. It is not the goal nor is it a tool, as practiced in many organizations. It is rather a management and leadership philosophy about how people are most enabled to contribute to continuous improvement and the ongoing success of their work organization. Employee involvement (EI) has been conceptualized as the process of developing a feeling of psychological ownership among organizational members and has been implemented via the participation of employees in information processing, decisionmaking and/or problem solving. (Kearney, 1997) Employee involvement has been identified as one of the seven elements of world-class manufacturing that can make both the smallest and largest companies competitive in the global market (Kearney, 1997) Employee involvement means that every employee is regarded as a unique human being not just a cog in a machine and each employee is involved in helping the organization meet its goals. Each employee s input is solicited and valued by his or her management. Employees and management recognize that each employee is involved in running the business. One of the greatest underlying factors in the success or failure of any organization is the power of its people and how well that power is focused towards meeting organizational 14

23 objectives. Organizations that can tap the strengths of their people will be stronger and more competitive that those that cannot. (Apostolou, 2002) Numerous studies, all point to the fact that employee involvement does influence organizational effectiveness; some of which includes lower absenteeism, (Marks et al, 1986), enhanced work attitudes (steel and Lloyd, 1988), higher individual work performance (Bush and Spangler, 1990), lower employee turnover and increased returns on equity (Vandenberg et at, 1999), and improved organizational learning culture (Thompson, 2002). Employee involvement is also expected to lead to increased product or service quality, greater innovation, stronger employee motivation, lower costs but a higher speed of production, and lower employee absenteeism and turnover (Lawler, 1996). 2.3 Decision-Making Decision-making makes it possible to adopt the best course of action in carrying out a given task. It becomes necessary to find out the best way when there are different ways of performing a task and the action finally selected should produce the best results and should be acceptable to both the workers and management. Satisfied workers put in their best efforts and this results in higher output which satisfies management who may come forward to share the gain with the workers, thus, there is improvement in the overall efficiency of the organization. 15

24 Torgersen & Weinstock (1972) talk of decision-making as the essence of management. Even though other organizational participants might take decisions, the decision-making capability of the manager will play a major role in the success of the organization. Decision-making is defined by Stone and Freeman (1984) as the process of identifying and selecting a course of action to solve a particular problem. Weihrich and Koontz (1993) define decision-making as the selection of a course of action among alternatives. Decision making in organizations has been described as a process of behaviour with the economic model at one extreme and the social model at the other extreme (Kimberly and Rotman, 1987). This description implies that only irrational decision making accords human values precedence over economic values. Leaders must find some middle ground between these extremes for it is evident that neither set of values can be ignored. In many organizations, managers have been confronted with the tasks of making severe, undesirable and unpleasant cuts of personnel and services in a hasty manner, because, in part, they failed to heed economic values in earlier decisions. Similarly, organizations have often been forced to retract decision, and to act in confusing manners, in chaotic situations, because they failed in part, to heed to human values in reaching earlier decisions. 16

25 2.4 Some Decision-making Theories Rational Decision Making where rational people make decisions in this theory based on the optimal choice of greatest benefit to them Tradeoff: These are often involved in decision-making in that to obtain one thing we want, we may have to sacrifice one or more things we want Biases These are when managers are often overoptimistic about the outcome of projects and choose people and actions that please them. 2.5 Empowerment Various researches and studies have found that employee empowerment leads to a truly nurturing environment where the employees can learn, grow, improve and enhance their functioning or performance abilities. Employee empowerment also provides for creating an environment of trust, importance in the eyes of the employees and since it enhances the capability of the respective employees; the same also leads to the creation of a positive work environment within the organizational set up. Empowerment means that all employees feel that they have the responsibility and authority to participate in decision-making and problem solving in their appropriate operating levels. 17

26 It is obvious that a whole company of skilled and capable problem solvers will have a distinct competitive advantage over an organization that only a few key distributors and an array of drones. (Apostolou, 2002) Empowerment involves decentralizing power within the organization to individual decision makers further down the line. Team working is a key part of the empowerment process and members are encouraged to make decisions for themselves in line with guidelines and frameworks established in self managing teams. Empowerment requires that management takes risks by turning over some control of the organ to the employees and this control must be planned and authorized. It behoves management to appreciate that relinquishing control to the effected and skilled employees will result in a more productive organization with better teamwork and faster problem solution. An empowered human resource that is employees will be able to respond more quickly to changes, improvements, new customer requirements as they begin to act independently in pursuit of their expectations and within the boundaries of their authority. Apostolou (2000) wrote that employee involvement and empowerment is a long term commitment, a new way of doing business, a fundamental change in culture. He said employees who have been trained, empowered and recognized for their achievements see their jobs and their companies from a different perspective. 18

27 According to him the cultural effect being sought is a sense of ownership of the company among its employees. Such employees own the company in that they feel personally responsible for its performance. By involving the people in the initial processes of decision-making, genuine commitment is obtained even if the original ideas are not theirs. Organizations that involve their employees in decision-making have evolved beyond merely telling people what is going on, to actively seeking their contribution to the decision-making process. 2.6 Methods of Employee Involvement There are several keys to involvement among which are financial and job security. Share ownership and profit distribution plans can help to foster an interest in a company s affairs at the competitive level which is often hard to get across in the normal day-to-day routine of workplace activity. Apostolou (2000) With regards to job security, having no doubts that one will still be with the company for a long time to come are likely to encourage a sense of belonging. Methods of getting employees involved are many and varied and these include suggestion systems, teams, focus groups, surveys, self-directed work groups, incentive programmes among others. 19

28 The aim is to determine the most effective option that will be linked to specific organizational goals. Certain key actions need to take place to be able to implement employee involvement. These, according to Apostolou are: Giving the employee the responsibility, training the employee to accept responsibility, communicating and giving feedback and giving rewards and recognition. Workers are being asked by management to join employee involvement programmes in order to improve the quality of their work lives by making the case that the days of destructive adversary, labour management relations are over and that a ruthless competitive economic world requires that workers and management cooperate so that both survive. It is therefore in the best interest of both workers and supervisors to increase happiness and satisfaction on the job as happy and satisfied employees are productive employees who ensure the employer s profit and continued existence of the company and the worker s job. Management, at such programs usually want access to workers knowledge of the job, cooperation in the introduction of new technology without protest, flexibility regarding job classifications, work rules, job assignments, the contract for the purpose of greater efficiencies as well as contract changes and sometimes contract concessions. 20

29 2.7 Conditions for Employee Involvement in decision-making According to Apostolou, (2002) if the employee involvement process is sincere and valid, it should meet the following six conditions where Management involves the Union at the highest levels as an equal partner from planning through implementation, and evaluation of employee involvement; the Union equally selects with management any consultants who are hired to set up and coordinate employee involvement committee. It is a voluntary process for both union and company. The Union selects, elects or appoints its representatives on the committees that deal with employee involvement. Collective bargaining and grievance matters are not a part of the program. These subjects remain outside of employee involvement. Management must also agree to the proposition in writing that no workers can be laid off or downgraded as a result of ideas generated by the workers in employee involvement committees. Money savings of employee involvement are shared with workers through items such as more money in the paycheck, free training, upgrading, a shorter workweek, etc. The union and management jointly determine this. Management actions on cooperation should be the same as management words. Management encourages a good relationship in its labour relations with the union as it simultaneously seeks to settle grievances at the lower levels. The right hand of 21

30 management employee involvement co-operations should not be chopped off by the left hand of management hostility and confrontation with the union. Words and actions must be consistent. According to Apostolou (2000), if the above terms are not followed by management, then the workers and union can quite rightly suspect that the program or process is a fraud designed to weaken if not bust the union. If the union believes that employee involvement is not legitimate, it should demand that management accept the six conditions outlined above or expose this program as phony and urge workers not to participate. In the words on of one national union, the union should educate its people that illegitimate employee involvement is is an attempt to create a shop floor structure controlled by management, and pushing management s point of view, aimed at undermining the union steward system and bypassing the union. The ultimate goal is to get rid of the union altogether, or transform it into a totally company union. Lawler (1993) a professor of management at the University of Southern California did a study of Fortune 100 firms on which business strategy offers the highest returns: process re-engineering, total quality management or employee involvement and the winner was employee involvement. Each of these three strategies produces an effect 22

31 but their studies indicate that employee involvement is a stronger driver of financial performance than total quality management or re-engineering, he said. Re-engineering, Lawler said, is basically a onetime change. You do it once and it has an impact, but it s not something you can do time after time. You can only downsize so much. You can t downsize your way to growth. In contrast, he said, employee involvement, if well implemented, changes the fundamental relationship between individuals and the organization they work for. It really builds employees in as a business partner, so they know more and they do more to make the organizations successful, particularly in industries where the human component is important that is most knowledge work, high-tech and many kinds of service industries. 2.8 Forms of Employee Involvement Employee involvement programmes can take a variety of forms including job participation, consisting of permanent programmes in which employees take a formal, direct role in decisions relating to job issues; consultative participation, including long term interventions like quality circles and employee suggestion schemes, in which employees opinions are sought as managers engage in decision-making It could also use representative participation, in which employees elect councils or board members to represent their interests to management or downward 23

32 communication, through newsletters and team briefings and various forms of financial participation via gain-sharing, profit-sharing and employee-ownership schemes (Lawler, 1996) According to Lawler (1986), it is however incorrect to assume that the mere existence of such organizational programmes as proxies for individual feelings toward involvement, and the individual acceptance of these practices. A more accurate test would operationalise involvement through the individual employee s attitude and behaviour. These types of operationalisation recognizes that the individual employee must perceive that the opportunity for involvement exists and that the employee must endorse it by actually putting involvement into practice in his or her daily work routine. An organization may have well-written policies concerning involvement, and top management may even believe it is being practiced, but these policies and beliefs are meaningless until the individual perceives them as something important to his or her presence in the organization (Vandenberg et al., 1999). Kristi M. Branch writes in Chapter 10: Participative Management and Employee and Stakeholder Involvement that participative management addresses the relationship between the organization and its workers and stakeholders. 24

33 It addresses fundamental issues of governance within organizations and the role of employees and external stakeholders in all levels of organizational decision-making. According to the writer, the literature on participative management and employee involvement is of interest now because it addresses the interactive relationship between the broader socio-political system and the workplace, in both empirical and philosophical or normative terms, and then tiers that examination down to look at the relationship between organizational design, managerial approach, workplace conditions, job and manager motivation and satisfaction. She continues to write that the traditional logic of organizing to give simple work to employees at the bottom of the pyramid who then report through a supervisor up a hierarchical chain of command to senior executives who provide direction, coordination and control. This does not work well for organizations managing knowledge intensive tasks and as the number and visibility of high knowledge-based organizations increases, the need for a new logic of management has gained currency among both academics and managers (Lawler 1996; Beer et al. 1990; Case 1998) Lawler (1996:22) summarizes some of the principles of this new logic, as shown in the table below. 25

34 Table 2.1 The New Logic of Management Old Logic Principle New Logic Principle Organization is a secondary source of competitive advantage Organization can be the ultimate competitive advantage Bureaucracy is the most effective source of control Involvement is the most effective source of control Top management and technical experts should add most of the value All employees must add significant value Hierarchical processes are the key to Lateral processes are the key to organizational effectiveness organizational effectiveness Organizations should be designed around functions Organizations should be designed around products and customers Effective managers are the key to Effective leadership is the key to organizational effectiveness organizational effectiveness Source: Lawler III., Edward E From the Ground up: Six principles for Building the New Logic Corporation. San Francisco: Jossey-Bass Publishers. P.22 In the United States, there is a widespread philosophical belief that people have a right to be involved in making decisions that affect their lives. This is matched by a belief that people who are involved in making decisions have a greater stake in carrying out those decisions that those who are involved (Bloom 2000:5). Participatory management is widely perceived as an attribute of socially responsible companies (Collins 1996), with participation in decision making at the workplace seen as central to the democratic vision and basic to the good society (Greenberg 1986). 2.9 Dimensions of Employee Involvement The core values are reflected in five different perspectives on the purpose and rationale for worker participation in organizations (Bolle de Bal (1992s: ): 26

35 The Managerial Approach, which is inspired by productivity and efficiency goals (participation is organized at a lower level in order to relieve worker dissatisfaction and morale problems). A key issue in this approach is the extent to which management delegates or retains the power to initiate, frame, and terminative participative processes. It also reflects management s view that the direct participation of workers undermines union power. The Humanist Psychology Approach, which is inspired by human growth and development goals, (participation as a way to enhance the well-being of the individual by promoting individual creativity, self-esteem, and ego strength). This approach reflects the movement led by Elton Mayo. It reflects a much more positive view of human nature and emphasizes the need to retrain managers to develop their participative leadership skills and unlearn authoritarian behaviours. It acknowledges the societal function of the workplace and the benefit of participatory restructuring of the workplace, given the central role it plays in the lives of most ordinary people (Pateman 1970). The Industrial Relations Approach, which is inspired by democratic goals (participation is not only a means to an end in itself but also a way to create a strongly democratic society, characterized by active participative citizens). 27

36 This approach reflects the importance of the external environment (not highly recognized in bureaucratic, hierarchical organization design but more widely recognized in organic, open-system designs). Participation in the workplace is seen as contributing to an effective and just society. The workplace is seen as a point of leverage from which to achieve a more egalitarian redistribution of power, leading to a greater democratization of the entire political process (Emery and Thorsrud 1969; Bachrach and Botwinick 1992; Pateman 1970; Matejko 1986). The Political Approach, which is inspired by revolutionary goals (participation as a means to change the overall structure of ownership to a collective base and to educate workers to class consciousness). Advancement toward greater worker participation is seen as very dependent upon a strong labour movement Benefits of Employee Involvement It is to be noted that not everyone subscribes to this positive view of participatory democracy or to the benefits of direct participation in the workplace. As literature on participative management and employee involvement accumulated, a wide range of benefits was elaborated, and organizations were encouraged to adopt a variety of participation strategies, and to cultivate a culture of participation (Denison 1990). 28

37 Kanter (1989;1983), for example, pointed out that a participatory work environment is theoretically more effective at enhancing innovations than traditional bureaucratic structures because it promotes the sharing of product knowledge between managers and workers, who are closest to the products being made and work being done and therefore more likely to develop strategies and suggestions for better quality items. Markowitz (1996) also asserted that giving employees decision-making power boosts their morale and commitment to the organization, which aids productivity; every body benefits: businesses accrue higher profits and stability because they are more secure in their industry niche and workers are more fulfilled and attached to the companies because they have a voice in decision-making. A summary of expected benefits as listed by Lawler (1990:38-40) are: Improved, more innovative and efficient work methods and procedures (less resistance to new methods may result, and the problem-solving process may produce innovations); better communication between management and workers and across work units It could lead to attraction and retention of employees (improvement results from increased satisfaction and involvement); reduced tardiness, turnover, and absenteeism; greater staffing flexibility (increased flexibility results from cross-training and teamwork); increased service and product quality (higher motivation and better methods increase the rate of output). 29

38 Reduced staff support and supervision requirements (more self-management and broader skills reduce the needs for staff support and supervision); more effective resolution of conflict and reduced number of grievances (better communication and an improvement in union-management relationship reduces the number of grievances); better decisions (better input and decision-making processes improve the quality of decisions); expansion of staff skills (problem-solving as well as technical skills are developed); improved morale and job satisfaction 2.11 Adverse Effects of Employee Involvement Some potential negative consequences were identified as salary and training costs (developing new skills and responsibilities for lower-level participants results in increased salaries and additional training); support personnel (if the new program creates a new structure that needs support and management, support personnel must increase) Expectations for organizational change and personal growth and development opportunities(any program that talks about participation increases expectations for organizational change and personal growth, which, if it is limited or fails, results in dissatisfaction and cynicism) Resistance by middle management and/or staff support groups(if they are not positively affected by the program, they may resist it) Lost time (participation takes time and can slow decision-making because a number of people have to understand and accept the decision). Lawler (1990) 30

39 2.12 Four Key Strategies of Employee Involvement Though there is no authoritative source or theory that defines participation, Lawler and others (Lawler 1998:197; Lawler et al. 1998; Ledford 1993) provide a good starting point by identifying four key strategies, whose nature and location in the organization are central issues for governance in all organizations and which largely determine the nature and degree of participation available to employees. These are information sharing, knowledge development, rewards and recognition systems and power sharing. Information sharing about business performance, plans, goals, and strategies, about new technologies and competitors performance is another. Without business information, individuals are restricted in their ability to make meaningful contributions, participate in planning and setting direction, understand the effectiveness of their performance and that of the organization. Information sharing includes both information disclosure and open communication processes. Knowledge development and training to provide skills in group decision-making and problem solving, leadership, quality and statistical analysis, an understanding of the business and job skills and cross-training. This knowledge and training enables employees to understand and contribute to organizational performance. Rewards and recognition systems that are based on the performance of the organization and that are designed to encourage employees to obtain information, add skills, take 31

40 more decision-making responsibility, enhance teamwork, and perform in ways that help the business (for example, through the use of individual incentives, work group or team incentives, profit sharing, employee stock ownership plans, stock options plans and non-monetary recognition and awards for performance. Power sharing, particularly in decision-making, either through parallel structure practices such as quality circles, committees, survey feedback, or suggestion systems, or work design power sharing practices such as job enrichment and redesign, selfmanaging work teams, mini-business units, and participation on decision-making boards and committees that enable employees to use and apply the information and knowledge effectively; key strategies include locating decisions at the lowest possible level in the organization. 32

41 CHAPTER THREE 3.0 RESEARCH METHODOLOGY AND ORGANISATIONAL PROFILE 3.1 Introduction This chapter describes the various methods and techniques used by to collect and analyze the data gathered for the study to gain a deeper understanding of the topic under study. The data collection stage is important since the result of the analysis is dependent on the quality of the data obtained. Therefore, the method selected for data collection must be the most appropriate to assist in achieving the objectives of the study: In this case it is to be used to determine the causes of low employee involvement or participation in decision-making; determine the consequences of low employee involvement in decision-making on the implementation of management decisions. It is also to be used to identify ways to arrest this problem in order to improve organizational performance and explore how employees can be involved and the result of involving employees in decision-making as well as make recommendations on how to improve the involvement of employees in decision-making. 33

42 3.2 Research Design This is an inductive study and it is concerned with the development of some criteria which can be used to derive information about the nature of the (members) organization from the nature of the small portion also called the sample of the given organization or group. The type of research design for this study is exploratory and it is conducted because a problem has not been clearly defined. It helps to determine the best research design, data collection method and selection of subjects. Exploratory research often relies on secondary research such as reviewing available literature and/or data, or qualitative approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups, projective methods, case studies or pilot studies. The results of exploratory research are not usually for decision-making by themselves but they can provide significant insight into a given situation. The objective is to gather preliminary information that will help define problems and suggest hypotheses. (Kotler et al, 2006) 34

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